Mark Carneyhttp://www.businessinsider.com/category/mark-carney
en-usThu, 22 Feb 2018 02:14:47 -0500Thu, 22 Feb 2018 02:14:47 -0500The latest news on Mark Carney from Business Insiderhttp://static3.businessinsider.com/assets/images/bilogo-250x36-wide-rev.pngBusiness Insiderhttp://www.businessinsider.com
http://www.businessinsider.com/mark-carney-brexit-wage-forecast-2018-2Mark Carney: People are earning 3.5% less than we estimated before the EU referendumhttp://www.businessinsider.com/mark-carney-brexit-wage-forecast-2018-2
Wed, 21 Feb 2018 10:27:07 -0500Oscar Williams-Grut
<p><strong><img src="http://static4.businessinsider.com/image/5a8d900a42e1cc607579f519-1472/rtssaer.jpg" alt="Bank of England Governor Mark Carney speaks at the Future Forum in Birmingham Town Hall, in Britain, October 14, 2016." data-mce-source="REUTERS/Chris Radburn/Pool" data-mce-caption="Bank of England Governor Mark Carney." data-link="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZ9A6AXPJ&amp;SMLS=1&amp;RW=1440&amp;RH=890#/SearchResult&amp;VBID=2C0BXZ9A6AYZV&amp;SMLS=1&amp;RW=1440&amp;RH=890&amp;PN=6&amp;POPUPPN=332&amp;POPUPIID=2C0FQEA6U5VF" /></strong></p>
<ul>
<li><strong>Mark Carney says Brexit has hit wages and pushed up inflation, meaning people are earning less than the Bank of England had forecast prior to Brexit referendum.</strong></li>
<li><strong>Pressure is expected to ease later this year.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Bank of England Governor Mark Carney said on Wednesday that real incomes are set to be 5% below pre-referendum forecasts by the end of this year.</p>
<p>Appearing before the Treasury Select Committee on Wednesday, Carney said that British incomes are currently 3.5% below where the central bank had forecast them to be prior to the June 2016 vote to leave the European Union.</p>
<p>Economists' forecasts have been ridiculed for their inaccuracy in many pro-Brexit circles but Carney said the figures were "to be expected" given the effects of the Brexit vote on the economy.</p>
<p>"We're in a transition period&nbsp;or a pre-transition period is perhaps a better way to put it," Carney told the Treasury Select Committee.</p>
<p>The pound sank to multi-year lows against both the euro and dollar in the wake of the vote, which has led to high inflation. Inflation rose rapidly after the vote and <a href="http://uk.businessinsider.com/brexit-uk-inflation-in-january-2018-2">currently sits at 3%</a>, well above the Bank of England's target of 2%.</p>
<p>Meanwhile, investment and wage growth have failed to keep pace. Wage data also out on Wednesday shows <a href="http://uk.businessinsider.com/uk-unemployment-rate-productivity-wages-2018-2">pay packets increased by 2.5% in January</a> &mdash; meaning people are effectively seeing real wage declines of 0.5%.</p>
<p>The cumulative effect is British people have less money in their pockets than the Bank had expected them to have at this point in time.</p>
<p>Carney said the 5% lag at the end of the year is expected to be the peak in divergence from the Bank's pre-referendum forecasts. Inflation is predicted to ease and <a href="http://uk.businessinsider.com/uk-pay-wages-payrise-bank-of-england-survey-2018-2">wage growth is expected to overtake inflation later this year.</a></p>
<p>Andy Haldane, the Bank of England's chief economist, told the Treasury Select Committee: "It is very likely average weekly earnings growth will nudge up to have a 3 in front of it [from next month]."</p><p><a href="http://www.businessinsider.com/mark-carney-brexit-wage-forecast-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/stock-market-sell-off-dow-volatility-jurrien-timmer-fidelity-bonds-2018-2">Here's why the recent stock market sell-off could save us from a repeat of "Black Monday"</a></p> http://www.businessinsider.com/bitcoin-failed-as-currency-bank-of-england-governor-mark-carney-2018-2Bank of England's Mark Carney: Bitcoin has 'failed' one of its key aimshttp://www.businessinsider.com/bitcoin-failed-as-currency-bank-of-england-governor-mark-carney-2018-2
Tue, 20 Feb 2018 03:30:50 -0500Will Martin
<p><strong><img src="http://static4.businessinsider.com/image/5a8bdcff7708e94bc6129a7a-1621/rtx4so10.jpg" alt="Mark Carney" data-mce-source="Reuters/Victoria Jones" data-mce-caption="Bank of England Governor Mark Carney speaks during the central bank's quarterly inflation report press conference in the City of London, Britain, February 8, 2018." /></strong></p>
<ul>
<li><strong>Bank of England Governor Mark Carney: Bitcoin has "failed" to become an actual currency.</strong></li>
<li><strong>Carney told students at London's Regent's University that bitcoin fails two key tests: it is neither a medium of exchange nor a store of value.</strong></li>
<li><strong>UBS, S&amp;P Global Ratings, and a senior ECB board member have all made similar arguments in recent months.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Bitcoin has so far "failed" in its ambition to be a legitimate currency, Bank of England Governor Mark Carney said on Monday evening.</p>
<p>Speaking at a private event at London's Regent's University, Carney told students that bitcoin fails to meet two key requirements of a currency: it is neither a medium of exchange, nor a store of value.</p>
<p>"It has pretty much failed thus far on... the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange," he said during a Q&amp;A session.</p>
<p>A medium of exchange can be widely used to purchase goods and services from sellers. While bitcoin can be used to buy things &mdash; particularly in unregulated parts of the internet &mdash; its high price volatility means that few retailers accept it.</p>
<p>Payment provider Stripe <a href="http://uk.businessinsider.com/stripe-ends-its-bitcoin-payments-product-2018-1">dropped support for bitcoin at the startup the year</a>, saying there are "fewer and fewer use cases for which accepting or paying with Bitcoin makes sense." Video game marketplace Steam also dropped bitcoin support in December, <a href="http://uk.businessinsider.com/valve-owned-steam-has-stopped-accepting-bitcoin-2017-12">blaming "high fees and volatility in the value of bitcoin."</a></p>
<p>Another key feature of a currency is that it acts as a store of value: you can invest your money and be reasonably sure that its value will not fluctuate massively. Bitcoin, <a href="http://uk.businessinsider.com/bitcoin-price-monday-february-19-climbs-above-11000-2018-2">which has seen its price appreciate around 30% in the last week alone</a>, does not offer that protection.</p>
<h2>'Fatal' flaws</h2>
<p>Carney's views are in-line with many other central banks and traditional financial figures. S&amp;P Global Ratings argued this week that <a href="http://uk.businessinsider.com/sp-global-ratings-on-cryptocurrency-contagion-risk-to-banks-2018-2">cryptocurrencies are "a speculative instrument" rather than a cryptocurrency</a> and ECB board member Yves Mersch said earlier this month that <a href="http://uk.businessinsider.com/ecbs-yves-mersch-compares-bitcoin-to-ponzi-scheme-in-cryptocurrency-speech-2018-2">cryptocurrencies "are not money."</a></p>
<p>UBS Wealth Management's outspoken chief economist Paul Donovan said in November that bitcoin will never become a true currency because of a series of "fatal" flaws.</p>
<p>"A currency has to be a widely used medium of exchange," Donovan said. "Cryptocurrencies are never going to achieve that. Period."</p>
<p>Central banks around the world are scrutinizing cryptocurrencies, which have transformed in a short period of time from a little known, niche asset, into a $500 billion market.</p>
<p>Many around the world aggressively trying to regulate the space, and deter people from putting money in what to many from the traditional finance sector is a highly speculative and incredibly risky investment. Earlier this week, <a href="http://uk.businessinsider.com/bitcoin-ethereum-youtube-polish-central-bank-smear-campaign-cryptocurrencies-2018-2">it emerged that Poland's central bank has paid YouTube stars to talk down cryptocurrencies</a> and discourage people from buying them.</p>
<p>However, <a href="http://uk.businessinsider.com/sweden-cryptocurrency-e-krona-riksbank-2018-1/?r=US&amp;IR=T">some are considering launching their own centralised digital currencies.</a> The Bank of England, for instance, has a task force looking at how the bank may be able to use cryptocurrencies and related tech in the future.</p><p><a href="http://www.businessinsider.com/bitcoin-failed-as-currency-bank-of-england-governor-mark-carney-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/blockchain-explainer-and-potential-2018-1">Here’s a great explanation of what the blockchain is from the person tasked with explaining it to the world</a></p> http://www.businessinsider.com/inflation-data-contradicts-the-bank-of-englands-hawkish-tone-2018-2The past week's economic data has given the Bank of England some serious thinking to dohttp://www.businessinsider.com/inflation-data-contradicts-the-bank-of-englands-hawkish-tone-2018-2
Sun, 18 Feb 2018 03:27:00 -0500Will Martin
<p><img src="http://static1.businessinsider.com/image/59840d4587543326ed1dfcac-2400/rts1a8vu.jpg" alt="Mark Carney" data-mce-source="Reuters/Frank Augstein" data-mce-caption="Britain's Bank of England Governor, Mark Carney, addresses journalists during a press conference to deliver the quarterly inflation report in London, August 3, 2017." /></p><p></p>
<ul>
<li><strong>The Bank of England has aggressively signalled that it will raise interest rates in 2017.</strong></li>
<li><strong>However, according to&nbsp;Andrew Goodwin, lead UK economist at Oxford Economics,&nbsp;the bank actually has little evidence in recent data to back up its hawkishness.</strong></li>
<li><strong>Rising domestic inflationary pressures, cited as a major reason for any potential hikes, are not really materialising just yet.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Last week, all eyes were on the Bank of England as<a href="http://uk.businessinsider.com/bank-of-england-inflation-message-2018-2"> it aggressively signalled that several rate hikes are most likely on their way in the next couple of years.</a></p>
<p>The markets bought it&nbsp;<span>and are now pricing a hike in May, the next time the quarterly Inflation Report is released &mdash; with BNP Paribas suggesting at least a 75% chance of a hike.</span></p>
<p><span>By August, the probability is now seen as 100%, according to market expectations.</span></p>
<p><span>However, it seems as though the bank actually has little evidence in recent data to back up that aggressive hawkishness, at least when it comes to rising domestic inflationary pressures, one of the main reasons given by the BoE for its shift in tone.</span></p>
<p><span>That's the view of Andrew Goodwin, lead UK economist at Oxford Economics, who wrote to clients this week that "Data offer scant backing to MPC&rsquo;s inflation concerns."</span></p>
<p><span>Earlier in the week, the Old Lady of Threadneedle Street released its latest&nbsp;agents' summary of business conditions, which polls the central bank's operatives in the UK's regions to create a holistic picture of what's going on in the economy.</span></p>
<p><span>The survey pointed to wages recovering strongly this year, <a href="http://uk.businessinsider.com/uk-pay-wages-payrise-bank-of-england-survey-2018-2">with&nbsp;businesses expecting wage growth to increase to 3.1% in 2018, up from&nbsp;2.6% last year.</a></span></p>
<p><span>"These results fit neatly alongside the narrative that the Committee has been using over the past six months," Goodwin wrote. </span></p>
<p><span>"But such evidence of escalating underlying inflationary pressures is largely survey-based and forward-looking. Indeed, the same survey has reported no pickup in the pace of unit labour cost growth in the dominant services sector since mid-2014."</span></p>
<p><span>Goodwin adds that "there was little in the remainder of the week&rsquo;s data to suggest that inflation needs taming," pointing to Tuesday's release of official inflation data for January by the Office for National Statistics.</span></p>
<p><span><a href="http://uk.businessinsider.com/brexit-uk-inflation-in-january-2018-2">Inflation unexpectedly remained at 3% in January,</a> having been expected to fall. Strangely, t</span>he cost of entry to attractions such as zoos and gardens was cited by the ONS as a key driver in the higher than expected reading.</p>
<p>"January&rsquo;s inflation data betrayed little cause for concern" for the Bank of England, Goodwin wrote.</p>
<p>"CPI inflation was flat at 3.0%, despite some very powerful positive base effects arising from some unusual seasonal movements in clothing prices at the start of last year.</p>
<p>"These effects unwound the following month, meaning that these base effects will reverse in the February data. And there will be further negative base effects from last February&rsquo;s sharp rise in petrol prices. So February looks set to mark the point at which inflation starts to decisively drop back."</p>
<p>Not only does official headline consumer inflation data point to inflation falling over the coming months, so too do other official inflation indicators.</p>
<p>"The producer prices data also pointed to a further weakening in consumer price inflation over the coming months," Goodwin wrote.</p>
<p>"Annual input cost inflation of 4.7% was the slowest since mid2016, while the 0.1% monthly increase in factory gate prices was the smallest for seven months."</p>
<p><span>The sharp fall in the value of the pound following the UK's vote to leave the EU in the summer of 2016&nbsp;was the initial driver of inflation, which surged from close to zero to around 3% in the course of just over a year.</span></p>
<p><span>However, Goodwin argued, the impact of that depreciation "</span>is clearly now fading and, with oil now trading some 12% below its late-January peak of $71 per barrel, the factors which have been so important in pushing up inflation over the past year are rapidly melting away."</p>
<p>Whether or not the Bank of England has overreached with its assertions about hikes in the future given current data is unclear, but the last few days have certainly&nbsp;given the bank some serious thinking to do.</p><p><a href="http://www.businessinsider.com/inflation-data-contradicts-the-bank-of-englands-hawkish-tone-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/jim-chanos-interview-2018-2">Jim Chanos on the return of choppy markets, Tesla, and the 'rent-seeking behavior' that's hurting our economy</a></p> http://www.businessinsider.com/bank-of-england-inflation-message-2018-2The Bank of England is no longer messing around with subtletyhttp://www.businessinsider.com/bank-of-england-inflation-message-2018-2
Sat, 10 Feb 2018 03:00:00 -0500Will Martin
<p><img src="http://static1.businessinsider.com/image/5a7dc9fdec1ade33611d323b-1723/380801346423c1d6b8581k.jpg" alt="Bank of England MPC" data-mce-source="Bank of England" data-link="https://www.flickr.com/photos/bankofengland/38080134642/in/album-72157626684486705/" /></p><p></p>
<ul>
<li><strong>The Bank of England is making it very clear that it plans to hike interest rates more than once in 2018.</strong></li>
<li><strong>The bank's communications have been unusually forthright in its last handful of announcements.</strong></li>
<li><strong>"Former Governor of the Bank of England, Mervyn King, once argued that a successful monetary policy should be 'boring.' On that criteria, the week&rsquo;s developments suggest that the current MPC may not be doing too well,"&nbsp;Martin Beck, lead UK economist at Oxford Economics wrote.</strong></li>
</ul>
<p>LONDON &mdash; Listen up. Interest rate hikes are coming, and they're coming at you fast.</p>
<p>That's the message the Bank of England is delivering, and it is doing so in the clearest possible manner for a central bank.</p>
<p>Central bank communication is a famously nuanced and often obtuse art, with the change of a single word in a policy statement able to shift perceptions and move markets.</p>
<p>Now however, the Bank of England is practically shouting at the British people and the markets.</p>
<p>On Thursday, after holding rates in a unanimous vote of its Monetary Policy Committee, <a href="https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-summary-and-minutes/2018/february-2018.pdf">the Old Lady of Threadneedle said that&nbsp;</a><span><a href="https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-summary-and-minutes/2018/february-2018.pdf">policy</a> could be "tightened somewhat earlier and by a somewhat greater extent over the forecast period" if the economy continues to grow as forecast.</span></p>
<p><span>"It will be likely be necessary to raise interest rates to a limited degree in a gradual process, but somewhat earlier and to a somewhat greater extent than what we had thought in November," Governor Mark Carney then <a href="http://uk.businessinsider.com/bank-of-england-mark-carney-interest-rate-decision-february-2018-2">said in a press conference after the announcement.</a></span></p>
<p><span>For the average reader, those words likely seem fairly dry, and reasonably non-committal &mdash; but in the world of central bank-eze, that's as clear as it gets.&nbsp;</span></p>
<p><span>"Former Governor of the Bank of England Mervyn King once argued that a successful monetary policy should be &ldquo;boring&rdquo;. On that criteria, the week&rsquo;s developments suggest that the current MPC may not be doing too well," Martin Beck, lead UK economist at Oxford Economics wrote on Friday, summarising the unusually vocal approach the Bank of England is taking to its policy.</span></p>
<p><span>"The publication of a surprisingly hawkish Inflation Report led the markets and ourselves to significantly reappraise the future path of Bank Rate."</span></p>
<p>The Bank made it even clearer it isn't bluffing when on Friday, Ben Broadbent &mdash; d<span>eputy governor for monetary policy, and Carney's effective number two &mdash;<a href="http://www.bbc.co.uk/programmes/b09qd8j5#play"> gave an interview to the BBC's Wake Up To Money.</a></span></p>
<p><span>Broadbent, who is one of the BoE's best communicators, was pretty much as unequivocal as a policymaker can be in public about the future path of interest rates, saying that should rates rise to 1% by the end of 2018, it would "hardly be a terribly big rise."</span></p>
<p>"We don't make promises about future interest rates," Broadbent was at pains to say, before effectively doing the opposite.</p>
<p>"There's nothing terribly dramatic going on here. The MPC said that they thought it likely that any rate rises required over the next two to three years would be limited and gradual. We wanted to emphasise that point yesterday. Yes, the path looks slightly higher, and rate rises may come a little bit sooner than expected in November."</p>
<p>"We do not fix the path of interest rates in advance. What is fixed is our remit, and rates change with the economy. Let's be clear, doubling of interest rates from 0.5% is hardly a terribly big rise."</p>
<p>"There's a reason they're low, there's all sorts of long term reasons as to why globally the level of interest rates required to keep inflation stable has been much lower than in the past," he continued.</p>
<p><span>"But nor do I think if there were to be a couple of 25 basis point rises in a year, that that would somehow be a great shock."</span></p>
<p><span>The bank's aggressive communication strategy appears to be doing the trick. Markets are now pricing a hike in May, the next time the quarterly Inflation Report is released &mdash; with BNP Paribas suggesting at least a 75% chance of a hike.</span></p>
<p><span>By August, the probability is now seen as 100%, according to market expectations.</span></p>
<p><span>The bank generally only changes policy on the day of an Inflation Report, as Governor Carney holds a press conference on those days, giving the bank a greater ability to communicate its reasoning behind decisions to the markets and wider public.</span></p>
<p><span>"Our expectation that the MPC will go for a further 25 basis points rise in Bank Rate in May has been reinforced and we now expect a second hike in 2018 in November."</span></p><p><a href="http://www.businessinsider.com/bank-of-england-inflation-message-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/stock-market-sell-off-dow-volatility-jurrien-timmer-fidelity-bonds-2018-2">Here's why the recent stock market sell-off could save us from a repeat of "Black Monday"</a></p> http://www.businessinsider.com/bank-of-england-mark-carney-interest-rate-decision-february-2018-2Get ready for higher rates: Bank of England upgrades growth forecasts and signals hikes are on the wayhttp://www.businessinsider.com/bank-of-england-mark-carney-interest-rate-decision-february-2018-2
Thu, 08 Feb 2018 07:00:00 -0500Will Martin
<p><img src="http://static2.businessinsider.com/image/5a7c53a9ec1ade1b532160b4-1702/rtx4snrg.jpg" alt="Mark Carney" data-mce-source="Reuters/Victoria Jones" data-mce-caption="Bank of England Governor Mark Carney speaks during the central bank's quarterly inflation report press conference in the City of London, Britain, February 8, 2018." /></p><p></p>
<ul>
<li><strong>The Bank of England left interest rates unchanged at 0.5% on Thursday in its first monetary policy decision of 2018</strong></li>
<li><strong>The rate was widely expected to remain unchanged, although the bank is expected to raise rates once or twice this year.</strong></li>
<li><strong>Bank signalled that interest rates could now rise faster and to a greater extent than previously expected.</strong></li>
<li><strong>Alongside rate decision, the bank raised its forecasts for the UK's growth prospects in both 2018 and 2019.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; The Bank of England left interest rates unchanged at 0.5% at the first meeting of its Monetary Policy Committee (MPC) in 2018,<a href="https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-summary-and-minutes/2018/february-2018.pdf"> it was announced on Thursday.</a></p>
<p>The MPC voted unanimously in favour of leaving rates unchanged. The bank's quantitative easing programme also remained unchanged, with a cap of &pound;435 billion on its asset purchases.</p>
<p>While policy was widely expected to remain unchanged, the bank made clear that it is ready for rate hikes in 2018, saying that policy could be "tightened somewhat earlier and by a somewhat greater extent over the forecast period" if the economy continues to grow as forecast.</p>
<p>"It will be likely be necessary to raise interest rates to a limited degree in a gradual process, but somewhat earlier and to a somewhat greater extent than what we had thought in November," Governor Mark Carney said in a press conference following the decision.</p>
<p><a href="https://www.bankofengland.co.uk/-/media/boe/files/inflation-report/2018/february/inflation-report-february-2018.pdf?la=en&amp;hash=555ED88EF574D368B81BF703480C1987EEBBA883">The bank released its Quarterly Inflation Report </a>alongside the monetary policy decisions. In it, the central bank upgraded its forecasts for UK economic growth in both 2018 and 2019.</p>
<p>The Bank of England now expects UK GDP to expand by 1.7% in 2018, compared to a previous forecast of 1.5% made in November. Growth in 2019 is expected to be 1.8%, compared to a previous forecast of 1.7%.</p>
<p>Markets currently expect at least one, and possibly two, interest rate increases in 2018.</p>
<p><a href="http://uk.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11">After hiking rates for the first time in a decade last year,</a> the Bank spent much of the rest of the year signalling that it will likely raise rates further in 2018. The market expects those hikes to come towards the end of the year, with either August or November seen as the most likely times.</p>
<p>Today's release suggests that the bank is considering a hike in May, the next time it releases an Inflation Report.</p>
<p>Despite the bank's language, Carney was keen to emphasise that there is no set path for rates.</p>
<p>"We're not going to tie our hands to a specific path for rates going forward. We are reiterating that these interest rate cycles are unlike those we would've experienced in the past," he said in a post-decision press conference.</p>
<p>The announcements "suggest that despite the recent upward revision to markets&rsquo; interest rate expectations, they may not have gone far enough," Paul Hollingsworth, senior UK economist at Capital Economics said in a note to clients/</p>
<p>"Even though recent UK economic growth has been subdued, our economy will receive continued support from strong global growth in 2018," Andrew Sentance, a senior economic adviser at PwC, and a former MPC member added.</p>
<p>"All the three main engines of the global economy - US, Europe and Asia - are performing well this year, and we are now in the best phase of global economic growth we have seen since the financial crisis.</p>
<p>"All this points to rising interest rates, both here in the UK and in other major economies."</p>
<p>Brexit remains the biggest cause of uncertainty in the UK economy, the Bank of England added, referring to "Brexit-related uncertainties" four times in the minutes of the MPC meeting.</p>
<p>"Developments regarding the United Kingdom's withdrawal from the European Union &ndash; and in particular the reaction of households, businesses and asset prices to them, remain the most significant influence on, and source of uncertainty about, the economic outlook," it said.</p>
<p>Sterling jumped on the announcement, with expectations of more rate hikes bullish for the UK's currency. By 1.30 p.m. GMT (8.30 a.m. ET), <a href="http://markets.businessinsider.com/currencies/GBP-USD">the pound</a> was up by around 1.1% against the dollar to trade above $1.40:</p>
<p><img src="http://static2.businessinsider.com/image/5a7c50da7101ad1d8812a8ab-878/screen shot 2018-02-08 at 132800.png" alt="Screen Shot 2018 02 08 at 13.28.00" data-mce-source="Markets Insider" /></p>
<h2>The growth picture</h2>
<p>The economic picture in the UK right now is somewhat murky. Backwards looking indicators (those which take into account actual hard data) are reasonably positive, with<span>&nbsp;</span><a href="http://uk.businessinsider.com/uk-economy-q4-gdp-brexit-2018-1">the UK's GDP in the fourth quarter growing at 0.5%</a><span>&nbsp;</span>&mdash; better than had been forecast. Inflation, which is the bank's biggest concern when setting rates,<span>&nbsp;</span><a href="http://uk.businessinsider.com/brexit-uk-inflation-in-december-2017-2018-1">has also started to fall.</a></p>
<p>However,<span>&nbsp;</span><a href="http://uk.businessinsider.com/ihs-markit-uk-services-pmi-january-2018-2">forward looking indicators are much less positive.</a><span>&nbsp;</span>Indicators like IHS Markit's PMIs, which rely on some hard data, but also on the future expectations of survey participants, have been universally disappointing in 2018. All three of the PMIs &mdash; for the services, manufacturing, and construction sectors &mdash; have come in worse than expected at the start of the year, with the construction sector in a particularly troubling state.</p>
<p><a href="http://uk.businessinsider.com/brexit-aftermath-ihs-markit-uk-construction-pmi-for-january-2018-2">The sector is "teetering on the edge of contraction,"</a><span>&nbsp;</span><span>&nbsp;and possibly heading towards recession in 2018.</span></p>
<p><span>"The pace of UK economic growth slowed sharply at the start of the year as January saw a triple whammy of weaker PMI surveys,"&nbsp;Chris Williamson,&nbsp;</span><span>&nbsp;</span><span>IHS Markit's chief business economist said in a statement.</span></p>
<p><span>The Bank of England's judgement is that while the domestic picture will remain reasonably strong, the economy will also be dragged higher by the strength of the global economic recovery.</span></p>
<p><span>"Growth has picked up significantly across many economies over the past two years. The outlook for global growth appears to have strengthened somewhat further over the past three months," the Inflation Report said.</span></p><p><a href="http://www.businessinsider.com/bank-of-england-mark-carney-interest-rate-decision-february-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/vmware-ceo-pat-gelsinger-tech-superpowers-ai-mobile-cloud-iot-2018-1">VMware CEO reveals which tech will have the most impact on the world, and why Elon Musk is wrong on AI</a></p> http://www.businessinsider.com/bank-of-england-interest-rate-decision-preview-2018-2What to expect from the Bank of England's first announcement of 2018http://www.businessinsider.com/bank-of-england-interest-rate-decision-preview-2018-2
Thu, 08 Feb 2018 01:45:00 -0500Will Martin
<p><strong><img src="http://static4.businessinsider.com/image/5a7b2c257101ad0ddb468dab-1651/rtx4ksys.jpg" alt="Mark Carney" data-mce-source="Reuters/Denis Balibouse" data-mce-caption="Bank of England Governor Mark Carney smiles as he attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 26, 2018." /></strong></p>
<ul>
<li><strong>The Bank of England will announce its first monetary policy decisions of 2018 later on Thursday.</strong></li>
<li><strong>It is widely expected that policy will be unchanged, but the bank will likely set the tone for the rest of the year's decisions.</strong></li>
<li><strong>Markets currently expect one or two interest rate hikes in 2018, but an uncertain economic picture could change that outlook.</strong></li>
<li><strong>Inflation fell at the end of 2017, while growth beat expectations. However, forward looking indicators suggest a coming slowdown of the economy.</strong></li>
</ul>
<hr />
<p>LONDON &mdash; The Bank of England faces falling inflation but an uncertain growth picture as it heads towards its first major policy announcement of 2018 on Thursday.</p>
<p>The bank will announce the findings of the first meeting of the rate setting Monetary Policy Committee of the year at noon.&nbsp;As it stands, the Bank's key interest rate is 0.5%, and that is unlikely to change. The MPC will also release its latest quarterly inflation report, providing updated economic forecasts from the bank.&nbsp;</p>
<p>Although policy is widely expected to stay on hold, the MPC is likely to set the tone for a year in which markets expect at least one, and possibly two, interest rate increases.</p>
<p><a href="http://uk.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11">After hiking rates for the first time in a decade in November last year,</a> the bank spent much of the rest of the year signalling that it will likely increase rates more in 2018. The market largely expects those hikes to come towards the end of the year, with either August or November the most likely times.</p>
<p>However, with the economy's future direction uncertain because of Brexit and other headwinds, it could be that the bank is forced to reconsider raising rates at all.</p>
<p>Thursday's meeting, for that reason, is crucial. If the bank strikes a more hawkish tone the market will be able to start preparing itself for hikes as the year progresses, while if the minutes of the MPC meeting, and Governor Mark Carney's subsequent press conference, are more dovish in the face of economic uncertainty, markets will likely move the other direction, and lessen their expectations of a hike.</p>
<h2>An uncertain economic future</h2>
<p>The economic picture in the UK right now is somewhat murky. Backwards looking indicators (those which take into account actual hard data) are reasonably positive, with <a href="http://uk.businessinsider.com/uk-economy-q4-gdp-brexit-2018-1">the UK's GDP in the fourth quarter growing at 0.5%</a> &mdash; better than had been forecast. Inflation, which is the bank's biggest concern when setting rates, <a href="http://uk.businessinsider.com/brexit-uk-inflation-in-december-2017-2018-1">has also started to fall.</a></p>
<p>However, <a href="http://uk.businessinsider.com/ihs-markit-uk-services-pmi-january-2018-2">forward looking indicators are much less positive.</a> Indicators like IHS Markit's PMIs, which rely on some hard data, but also on the future expectations of survey participants, have been universally disappointing in 2018. All three of the PMIs &mdash; for the services, manufacturing, and construction sectors &mdash; have come in worse than expected at the start of the year, with the construction sector in a particularly troubling state.</p>
<p><a href="http://uk.businessinsider.com/brexit-aftermath-ihs-markit-uk-construction-pmi-for-january-2018-2">The sector is "teetering on the edge of contraction,"</a><span>&nbsp;and possibly heading towards recession in 2018.</span></p>
<p><span>"The pace of UK economic growth slowed sharply at the start of the year as January saw a triple whammy of weaker PMI surveys,"&nbsp;Chris Williamson,&nbsp;</span><span>IHS Markit's chief business economist said in a statement.</span></p>
<h2><span>Brexit clouds the picture</span></h2>
<p><span><img src="http://static5.businessinsider.com/image/5912bd8edd089595418b45db-1738/may juncker1.jpg" alt="may juncker1" data-mce-source="Reuters" data-mce-caption="Britain's Prime Minister Theresa May welcomes Head of the European Commission, President Jean-Claude Juncker to Downing Street in London, Britain April 26, 2017." /></span></p>
<p><span>This makes the BoE's job particularly difficult, particularly <a href="http://uk.businessinsider.com/theresa-may-set-to-delay-decision-on-brexit-endstate-as-government-struggles-with-workload-2018-2">when complications around the progress of Brexit talks, and the form Brexit eventually takes,</a> are considered.</span></p>
<p><span>John Wraith, a strategist at UBS alluded to this point in a note circulated to clients on Wednesday, saying that the possibility of a rate hike in May, the next time the bank releases an Inflation Report &mdash; meaning Governor Carney also holds a press conference &mdash; effectively hinges on progress in Brexit talks.</span></p>
<p>"Although the MPC won't explicitly say so given political sensitivities, we expect their decision in May to be almost entirely determined by whether or not a transitional deal has been fully agreed and signed by then," Wraith said.</p>
<p>"If it has, the MPC is likely to have at least a brief window to raise rates again as there will be some relief among consumers and a release of some pent up investment demand. Waiting any longer risks the more fundamental and material issues relating to the long term relationship between the UK and the EU hurting sentiment again, while slowing inflation and &ndash; in our view &ndash; growth will further disarm the MPC."</p>
<p>"Failure to sign a deal at the March 23 EU Summit will in our opinion see the MPC back away from raising rates in May."</p>
<p><em>Business Insider will have full coverage of the Bank of England's decision and Carney's press conference from 12.00 p.m. GMT (7.00 a.m. ET) onwards.</em></p><p><a href="http://www.businessinsider.com/bank-of-england-interest-rate-decision-preview-2018-2#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/amazon-shaking-up-healthcare-industry-ripe-for-disruption-2018-2">Amazon is shaking up a healthcare industry that's ripe for disruption</a></p> http://www.businessinsider.com/bank-of-england-governor-mark-carney-conscious-recoupling-uk-global-economies-2018-1Bank of England Governor Mark Carney sees a 'conscious recoupling' of the UK and global economieshttp://www.businessinsider.com/bank-of-england-governor-mark-carney-conscious-recoupling-uk-global-economies-2018-1
Fri, 26 Jan 2018 03:25:28 -0500Oscar Williams-Grut
<p><strong><img src="http://static6.businessinsider.com/image/5a6ae618ec1ade69b122f358-1600/whatsapp image 2018-01-26 at 081250.jpeg" alt="Gwyneth Paltrow and Mark Carney" data-mce-source="Reuters/Mario Anzuoni; Reuters/Victoria Jones" /></strong></p>
<ul>
<li><strong>The UK's economic growth is forecast to be less than half global average this year.</strong></li>
<li><strong>Bank of England Governor blames "short-term" Brexit effect, which is deterring businesses from investing.</strong></li>
<li><strong>Carney says there is scope for a "conscious recoupling" of the UK to global growth rates once we get more clarity on Britain's future trading relationship with Europe.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Bank of England Governor Mark Carney referenced Hollywood star Gwyneth Paltrow on Friday when talking about the potential for the UK's economy to catch up to global growth levels.</p>
<p>Earlier this week <a href="http://www.bbc.co.uk/news/business-42776549">the International Monetary Fund (IMF) upgraded global growth forecasts to 3.9% this year</a>, while at the same time cutting the UK's economic growth prospects to just 1.5%.</p>
<p>Speaking from Davos, Carney told BBC Radio 4's Today programme: "The global economy has really accelerated over the course of the last year we think it's going to pick up again this year... The UK is a bit of an outlier in that [the IMF] don't see it picking up. I think we at the Bank of England see some potential for a bit of a pickup."</p>
<p>The Governor blamed the poor performance on a "short term" Brexit effect, which was putting businesses off investing, and said that greater clarity on Britain's future trading relationships could help the UK catch up to average growth rates.</p>
<p>Carney said: "There's the prospect this year, as there's greater clarity about the future relationship with Europe, and subsequently, the rest of the world, for a recoupling if I can use that term, borrowed from Gwyneth Paltrow &mdash; a conscious recoupling of the UK economy with the global economy."</p>
<p>Paltrow famously <a href="http://www.dailymail.co.uk/tvshowbiz/article-4565666/Gwyneth-Paltrow-stands-conscious-uncoupling.html">described her split from Coldplay singer Chris Martin as a "conscious uncoupling,"</a> a term that was widely mocked at the time.</p>
<h2>'Investment in advanced economies is double digit and in the UK it's low single digits'</h2>
<p>Carney said the UK's current growth deficit is a "short-term" Brexit effect.</p>
<p>"What's happening in the UK is effectively the Brexit effect, in the short term, and I would underscore in the short-term, businesses in the UK &mdash; whether they're in agriculture, whether they're in financial services, car manufacturing &mdash; are waiting to see what kind of relationship we will have with Europe and what kind of relationship we'll have with the rest of the world," Carney said.</p>
<p>"What's really going on in the economy now is that, not surprisingly, is that even though businesses have very strong balance sheets, even though credit is freely available, even though we're at virtually full employment, investment has picked up a bit but it hasn't picked up to the same way it has internationally. Investment in advanced economies is double digit and in the UK it's low single digits."</p>
<p>Greater clarity on future trading relationships should boost growth, Carney said.</p>
<p>"The deeper the relationship with Europe, the deeper the relationship with the world &mdash; and the two are obviously connected, it's a complicated set of negotiations &mdash; the better it will be for the UK economy."</p>
<p>Carney also defended the Bank of England's record on Brexit forecasting. The central bank has been criticised as part of Project Fear, the term Brexit supporters use to label those who predicted economic collapse if Britain voted to leave.</p>
<p>The Governor said: "We said prior to the referendum that if there was a vote in favour of leaving that the pound would go down sharply &mdash; it did &mdash; that the economy would begin to slow &mdash; it has &mdash; and we expected inflation to rise.</p>
<p>"We're in a position today where the economy is about a percentage point less in size than we expected just before the vote, by the end of the year probably two percentage points.</p>
<p>"What it works out to is tens of billions of pounds lower economic activity. The question is how do we make that up over time by growing above potentially."</p><p><a href="http://www.businessinsider.com/bank-of-england-governor-mark-carney-conscious-recoupling-uk-global-economies-2018-1#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/fund-manager-shares-what-everyone-gets-wrong-about-economy-2018-1">A $445 billion fund manager explains what everyone gets wrong about the economy</a></p> http://www.businessinsider.com/presidents-club-bank-of-england-distances-itself-mark-carney-dismayed-2018-1Mark Carney is 'deeply dismayed' by the Presidents Club dinner, the charity auction where hostesses were allegedly groped and harassedhttp://www.businessinsider.com/presidents-club-bank-of-england-distances-itself-mark-carney-dismayed-2018-1
Wed, 24 Jan 2018 10:51:36 -0500Oscar Williams-Grut
<p><strong><img src="http://static5.businessinsider.com/image/5986d01527fa6b30494f8c65-1500/mark carney 2.jpg" alt="mark carney 2" data-mce-source="REUTERS/Kirsty Wigglesworth/Pool" data-mce-caption="Mark Carney, Governor of the Bank of England takes part in a panel discussion at The Bank of England in London, Britain, March 21, 2017." /></strong></p>
<ul>
<li><strong>Hostesses at an exclusive men-only black-tie charity dinner at London were allegedly repeatedly sexually harassed by guests, FT investigation claims.</strong></li>
<li><strong>One of the lots auctioned off at the event was tea with Bank of England Governor Mark Carney.</strong></li>
<li><strong>Bank of England says the lot was a re-selling of a previously auctioned offer, it was unaware it was being re-sold, and had no dealing with the Presidents Club or its organisers.</strong></li>
<li><strong>Carney "deeply dismayed that such an event could take place," BoE says.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; The Bank of England has distanced itself from the Presidents Club charity dinner, <a href="http://uk.businessinsider.com/presidents-club-dinner-all-male-event-sexual-harassment-allegations-2018-1">a glitzy business event in central London at the heart of allegations of sexual harassment and inappropriate behaviour.</a></p>
<p>The Financial Times on Wednesday published a bombshell account of the all-male event, attended by financiers, businessmen, and politicians.<a href="https://www.ft.com/content/075d679e-0033-11e8-9650-9c0ad2d7c5b5">According to an investigation by The FT</a>, women who were hired to be hostesses at the event were groped, propositioned and subjected to lewd remarks.</p>
<p>The report has caused shockwaves in British society, <a href="http://www.cityam.com/279384/david-mellor-stepping-down-over-presidents-club-scandal">forcing Presidents Club organised David Mellor to resign from a government position and leading to calls for families minister Nadhim Zahawi, who attended in the past, to resign.</a></p>
<p>The scandal has escalated to such a level that the Bank of England has issued a statement distancing itself from the event. The FT reported that one of the lots up for auction at last week's event was tea with Bank of England governor Mark Carney.</p>
<p>The central bank said it had "no contact at any point with the Presidents Club or any of the organisers of the even" and said the auction lot appeared to be a re-auctioning of an offer made at the Lord Mayor&rsquo;s Appeal. The Bank of England said it has now withdrawn its offer.</p>
<p>The BoE added that Carney is "deeply dismayed that such an event could take place."</p>
<p><strong>Here's the Bank of England's full statement:</strong></p>
<p style="padding-left: 30px;">"The Bank of England wishes to reiterate that it was not aware of the Presidents Club Dinner and did not approve any prize for auction at the event. It has had no contact at any point with the Presidents Club or any of the organisers of the event.</p>
<p style="padding-left: 30px;">"The Governor is deeply dismayed that such an event could take place.</p>
<p style="padding-left: 30px;">"At the request of the previous Lord Mayor, the Bank agreed to donate a tour of the Bank to the Lord Mayor&rsquo;s Appeal for their charity auction. The Lord Mayor&rsquo;s Appeal works with businesses, local communities and charities to find solutions to some of London&rsquo;s most pressing social issues.</p>
<p style="padding-left: 30px;">"The Bank understands that the successful bidder in the Lord Mayor&rsquo;s auction subsequently re-auctioned this prize at the Presidents Club Dinner. He did not consult or contact the Bank in any way before doing so. If he had, the Bank would have refused permission. The Bank has a clear policy on the charities with which it is associated and this does not include the Presidents Club.</p>
<p style="padding-left: 30px;">"The unauthorised re-auctioning of the prize at the Presidents Club dinner was clearly against the spirit of the original donation.</p>
<p style="padding-left: 30px;">"The Bank has therefore made clear that it has been withdrawn."</p><p><a href="http://www.businessinsider.com/presidents-club-bank-of-england-distances-itself-mark-carney-dismayed-2018-1#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/amazon-shaking-up-healthcare-industry-ripe-for-disruption-2018-2">Amazon is shaking up a healthcare industry that's ripe for disruption</a></p> http://www.businessinsider.com/paul-marshall-marshall-wace-bank-of-england-brexit-forecasts-2018-1The founder of one of Britain's biggest hedge funds thinks the Bank of England is 'embarrassing' itself by being too negative on Brexithttp://www.businessinsider.com/paul-marshall-marshall-wace-bank-of-england-brexit-forecasts-2018-1
Thu, 18 Jan 2018 04:59:00 -0500Will Martin
<p><strong><img src="http://static5.businessinsider.com/image/5a325e247101ad76794327d8-1620/rtx3pxay.jpg" alt="Mark Carney" data-mce-source="Reuters/Gonzalo Fuentes" data-mce-caption="Bank of England Governor Mark Carney attends a working session during the One Planet Summit at the Seine Musicale center in Boulogne-Billancourt, near Paris, France, December 12, 2017." /></strong></p>
<ul>
<li><strong>Paul Marshall, cofounder of $34 billion UK hedge fund, Marshall Wace, accuses the Bank of England of anti-Brexit bias.</strong></li>
<li><strong>The Old Lady of Threadneedle Street's forecasts since the vote have been "so far adrift as to be embarrassing," Marshall wrote in the Financial Times.</strong></li>
<li><strong>Marshall was a major backer of the leave campaign during the run up to the referendum, and donated around &pound;100,000 to the campaign. </strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Paul Marshall, a cofounder of British hedge fund giant Marshall Wace, has accused the Bank of England of being excessively negative about Brexit, and by doing so, says the central bank is at risk of ruining its credibility.</p>
<p><a href="https://www.ft.com/content/2ec41698-f48f-11e7-a4c9-bbdefa4f210b">Writing in the Financial Times on Wednesday,</a> Marshall said that the bank's persistently pessimistic forecasts about the negative economic impacts of the vote to leave the EU could now be considered to mark the beginnings of what he called a "<span>systematic cognitive bias."</span></p>
<p><span>"All of us have these types of biases and good economic forecasters are careful to be aware of their own prejudices," Marshall wrote.</span></p>
<p><span>"Not so the Bank of England. It has now come to embody anti-Brexit cognitive bias to such a degree that it endangers its credibility as an institution."</span></p>
<p><span>Marshall, it should be noted, was a major backer of the leave campaign during the run up to the referendum, and donated around &pound;100,000 to the campaign. </span></p>
<p><span>The biggest point of criticism of the bank, Marshall wrote, centres around its August 2016 forecasts &mdash; the first set after the referendum.</span></p>
<p><span>"The bank&rsquo;s forecasts were so far adrift as to be embarrassing. And because the Bank of England not only makes predictions but also sets monetary policy, poor forecasting can lead to poor policy," Marshall, whose firm has assets under management of close to $34 billion.</span></p>
<p><span>"Those errant forecasts provided the rationale for last year&rsquo;s emergency cut in interest rates and additional quantitative easing that were, with the benefit of hindsight, unnecessary."</span></p>
<p><span>Marshall's article resurfaces criticisms that were aggressively levelled at the bank soon after the referendum, when numerous leave backing politicians <a href="http://uk.businessinsider.com/mark-carney-quit-resign-2016-10">called for the resignation of Governor Mark Carney, over what they saw as Carney's embodiment of the bank's anti-Brexit biases.&nbsp;</a></span></p>
<p>In late 2016, Carney faced attacks from the likes of former Tory leader William Hague, failed Conservative party leadership candidate Michael Gove, and former chancellors Norman Lamont and Nigel Lawson.</p>
<p>Most of his critics at the time felt he was too supportive of the Remain campaign prior to the EU referendum, and had politicised a role that is supposed to be purely technocratic.</p><p><a href="http://www.businessinsider.com/paul-marshall-marshall-wace-bank-of-england-brexit-forecasts-2018-1#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/vmware-ceo-pat-gelsinger-tech-superpowers-ai-mobile-cloud-iot-2018-1">VMware CEO reveals which tech will have the most impact on the world, and why Elon Musk is wrong on AI</a></p> http://www.businessinsider.com/carney-no-reason-city-of-london-cant-get-a-custom-brexit-deal-2017-12CARNEY: There's no reason the City of London can't get a custom Brexit dealhttp://www.businessinsider.com/carney-no-reason-city-of-london-cant-get-a-custom-brexit-deal-2017-12
Wed, 20 Dec 2017 09:55:06 -0500Will Martin
<p><img src="http://static5.businessinsider.com/image/5a3a7eb07101ad4ca04539ca-1708/rtx3k53a.jpg" alt="Mark Carney" data-mce-source="Reuters/Victoria Jones" data-mce-caption="Bank of England Governor Mark Carney speaks during the Bank's financial stability report at the Bank of England in the City of London, Britain November 28, 2017" /></p><p></p>
<ul>
<li><strong>No reason a custom deal can't be struck for the City of London, Bank of England governor says.</strong></li>
<li><strong>Speaking to the Treasury Select Committee, Mark Carney said that he doesn't "accept the argument that just because it has not been done in the past, it can&rsquo;t be done in the future."</strong></li>
</ul>
<hr />
<p><span><br />LONDON &mdash; Bank of England Governor Mark Carney believes there is no reason that the City of London cannot be covered by any bespoke Brexit deal.</span></p>
<p><span>Speaking to the House of Commons' Treasury Select Committee on Wednesday afternoon, Carney was asked about comments from the EU's top Brexit negotiator Michel Barnier claiming that the UK's financial services sector will not be included in any Brexit deal if the UK leaves the single market.</span></p>
<p>"There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn&rsquo;t exist," <a href="http://uk.businessinsider.com/barnier-rules-out-a-brexit-trade-deal-for-the-city-of-london-2017-12">Barnier said in an interview earlier this week.</a></p>
<p>Barnier said the result would be a consequence of "the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport."</p>
<p><span>Carney disputes that approach, telling the TSC: "</span><span>I don&rsquo;t accept the argument that just because it has not been done in the past, it can&rsquo;t be done in the future."</span></p>
<p><span><span style="font-weight: 400;">"We&rsquo;d just walk away from progress if that were the approach we took to issues," Carney said appearing to take a swipe at Barnier's comments.</span></span></p>
<p><span style="font-weight: 400;">"The UK financial system is, like it or not, is effectively the banker for Europe i</span><span style="font-weight: 400;">n the most complicated bits of finance, the wholesale markets, the equity underwriting, the derivatives, FX trading.There are substantial economies of scale that benefit both sides,"&nbsp;Carney told the committee.</span></p>
<p><span style="font-weight: 400;">"We have a system and a set of regulations that have been significantly, significantly improved over the course of the last decade, that means that we can operate that system, both responsibly and reliably."</span></p>
<p><span style="font-weight: 400;">"From a trade perspective, if you&rsquo;re going to have trade in services, we are now in a position where you can have free trade in financial services, or some form of cooperative arrangement in financial services," Carney continued.</span></p>
<p><span style="font-weight: 400;">"That&rsquo;s because you have very high common standards, you have high transparency about who implements them, and existing modes of supervisory cooperation."</span></p>
<p><span><a href="http://uk.businessinsider.com/bank-of-england-new-rules-to-allow-eu-to-operate-in-uk-after-brexit-2017-12">The future of the City of London and the wider UK financial sector has been up in the air since the Brexit vote</a>, with fears about the loss of the so-called financial passport causing many overseas lenders to announce plans to set up new EU operations away from the UK.</span></p>
<p><span>The passport is a set of rules and regulations which allow UK-based finance firms to trade with and sell their services into Europe, and is tied strongly to membership of the European Single Market.</span></p><p><a href="http://www.businessinsider.com/carney-no-reason-city-of-london-cant-get-a-custom-brexit-deal-2017-12#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/wharton-david-reibstein-trump-bad-for-america-brand-davos-2018-2">Forget 'Make America Great Again' — Wharton professor says Trump has been terrible for America's brand</a></p> http://www.businessinsider.com/philip-hammond-and-mark-carney-visit-china-on-trade-mission-2017-12Philip Hammond and Mark Carney are in China to secure £1 billion of trade dealshttp://www.businessinsider.com/philip-hammond-and-mark-carney-visit-china-on-trade-mission-2017-12
Sat, 16 Dec 2017 05:17:25 -0500
<p><img src="http://static1.businessinsider.com/image/58f84e8edd08955f788b4a3b-1067/undefined" alt="Mark Carney and Philip Hammond" data-mce-source="Reuters/Neil Hall" /></p><p></p>
<ul>
<li><strong>Chancellor&nbsp;Philip Hammond and&nbsp;Bank of England Governor Mark Carney are in China.</strong></li>
<li><strong>They hope to spearhead trade deals of up to&nbsp;&pound;1 billion ($1.34 billion) between Britain and&nbsp;China.</strong></li>
<li><strong>London Stock Exchange CEO Nikhil Rathi is also in Beijing.</strong></li>
</ul>
<hr />
<p><br />LONDON (Reuters) - Britain hopes to seal &pound;1 billion ($1.34 billion) worth of trade and investment agreements with China during a&nbsp;weekend visit by finance minister Philip Hammond and Bank of England chief Mark Carney.</p>
<p>The Beijing visit is the latest instalment in long-running economic talks between the two states but it has now taken on new importance for Britain as it looks to re-invent itself as a global trading nation after leaving the European Union in 2019.</p>
<p>"We are committed to working with our partners to build a truly global Britain, and our relationship with China is strong, growing, and delivering benefits for both countries," Hammond said in a statement released by his office ahead of the trip.</p>
<p>The focus on a "Golden Era" of relations, touted loudly by both sides in 2015 when then-prime minister David Cameron hosted a state visit by President Xi Jinping, has cooled under Cameron's successor Theresa May.</p>
<p>In 2016 she caused a diplomatic spat by unexpectedly deciding to delay approval of a partly-Chinese funded nuclear power project. She later granted it, but not before drawing criticism from Beijing.</p>
<p>Nevertheless, the government said on Friday it wanted to begin a new phase. Hammond will meet Chinese Premier Li Keqiang, Vice Premier Ma Kai, and other officials.</p>
<p>Business Minister Greg Clarke will also travel to Beijing along with a delegation of executives including London Stock Exchange CEO Nikhil Rathi and representatives from major financial firms such as BlackRock, HSBC, and Standard Chartered Bank.</p>
<p>Talks are expected to focus on a more integrated approach to financial services, new industrial partnerships, and economic reform. Previous rounds of discussions have looked at how to develop London as an offshore hub for trading China's currency and closer integration of the two countries' stock markets.</p><p><a href="http://www.businessinsider.com/philip-hammond-and-mark-carney-visit-china-on-trade-mission-2017-12#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-city-amazon-choose-hq2-headquarters-philly-austin-2018-2">A Wharton professor predicts what city Amazon will choose for their new headquarters</a></p> http://www.businessinsider.com/bank-of-england-interest-rate-decision-december-2017-12Bank of England holds rates, hints that more hikes could be on their wayhttp://www.businessinsider.com/bank-of-england-interest-rate-decision-december-2017-12
Thu, 14 Dec 2017 07:00:00 -0500Will Martin
<p><img src="http://static5.businessinsider.com/image/5a325e247101ad76794327d8-1620/rtx3pxay.jpg" alt="Mark Carney" data-mce-source="Reuters/Gonzalo Fuentes" data-mce-caption="Bank of England Governor Mark Carney attends a working session during the One Planet Summit at the Seine Musicale center in Boulogne-Billancourt, near Paris, France, December 12, 2017." /></p><p></p>
<ul>
<li><strong>Bank of England leaves monetary policy unchanged, with its base interest rate remaining at 0.5%.</strong></li>
<li><strong>Britain's central bank had been widely expected to leave policy unchanged after raising interest rates at its last meeting in November.</strong></li>
<li><strong>"Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent," BoE says.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; The Bank of England<a href="https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2017/december-2017"> left monetary policy unchanged in December, </a>as had been widely expected.</p>
<p><a href="http://uk.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11">After raising interest rates for the first time in more than a decade in November, </a>the Old Lady of Threadneedle Street was always set for a quiet month, and that proved so, with the bank leaving interest rates unchanged at 0.5%, and leaving its &pound;435 billion cap in place for its QE programme.</p>
<p>The bank's Monetary Policy Committee voted unanimously to leave rates on hold.</p>
<p><span>At its November meeting, the bank hinted that the path of interest rates could steepen somewhat in the coming year or so, signalling the potential for another rate hike in early 2018, and possibly even another towards the end of the year, should the economy remain reasonably robust.</span></p>
<p><span>That view was maintained in December, with the MPC saying that it "</span><span>remains of the view that, were the economy to follow the path expected in the November Inflation Report, further modest increases in Bank Rate would be warranted over the next few years, in order to return inflation sustainably to the target."</span></p>
<p><span>"Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent."</span></p>
<p><span>The bank made clear that Brexit remains the most important influence on the British economy right now, saying that: "Developments regarding the United Kingdom&rsquo;s withdrawal from the European Union &ndash; and in particular the reaction of households, businesses and asset prices to them &ndash; remain the most significant influence on, and source of uncertainty about, the economic outlook."&nbsp;</span></p>
<p><span>With inflation still rising thanks to the depreciation of the pound since the vote to leave the EU last summer, the bank faces a key trade off, balancing that inflation with the slowdown in the economy, dwindling consumer spending and declining inward investment.</span></p>
<p><span>Inflation hit 3.1% in November, more than one percentage point above the bank's Treasury mandated 2% target, meaning that Governor Mark Carney must now write a letter to Chancellor Philip Hammond explaining why that is the case.</span></p>
<p><span>"In line with the procedure set out in the MPC&rsquo;s remit, the Governor will be writing an open letter to the Chancellor of the Exchequer, accounting for the overshoot relative to the target and explaining the MPC&rsquo;s policy strategy to return inflation sustainably to the target," the bank said.</span></p>
<p>The pound was little changed against the dollar after the decision, reflecting the lack of surprise in the markets at the decision, as the chart below illustrates:</p>
<p><img src="http://static2.businessinsider.com/image/5a326b3f7101ad771014ae8a-777/screen shot 2017-12-14 at 121257.png" alt="Screen Shot 2017 12 14 at 12.12.57" data-mce-source="Markets Insider" /></p><p><a href="http://www.businessinsider.com/bank-of-england-interest-rate-decision-december-2017-12#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/wharton-david-reibstein-trump-bad-for-america-brand-davos-2018-2">Forget 'Make America Great Again' — Wharton professor says Trump has been terrible for America's brand</a></p> http://www.businessinsider.com/mark-carney-britain-could-scrap-bankers-bonus-caps-post-brexit-2017-11Mark Carney: Britain could scrap bankers' bonus caps post-Brexithttp://www.businessinsider.com/mark-carney-britain-could-scrap-bankers-bonus-caps-post-brexit-2017-11
Thu, 30 Nov 2017 03:51:03 -0500Oscar Williams-Grut
<p><img src="http://static6.businessinsider.com/image/5a1fc6ebec1ade35a2140e7f-1000/mark carney 4.png" alt="Mark Carney 4" data-mce-source="Bank of England / YouTube" /></p><p></p>
<ul>
<li><strong>Bank of England governor said bankers' bonus rules could be scrapped post-Brexit.</strong></li>
<li><strong>Regulation of insurers and challenger banks could also be relaxed, Carney suggests.</strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Britain could scrap restrictions on bankers' bonuses after it leaves the European Union, the Bank of England governor has hinted.</p>
<p>Mark Carney said at an event in London: "There are things we don&rsquo;t think are necessary... There are areas we would make changes but within the context of maintaining the overall levels of resilience," <a href="https://www.ft.com/content/dea0611c-d51c-11e7-a303-9060cb1e5f44">according to The Financial Times.</a></p>
<p>Carney highlighted bankers' bonus caps and some parts of insurance regulation as areas that could be changed. He added that he doesn't think challenger banks and building societies shouldn't feel the full weight of regulation that established banks deal with.</p>
<p>EU bonus cap rules currently limit investment bankers' bonuses to 100% of their pay unless shareholders approve awards of up to 200%.</p>
<p>Britain clashed with the EU over the rules and <a href="https://www.ft.com/content/12d1ba3a-7094-11e4-9129-00144feabdc0">former Chancellor George Osborne fought a legal challenge against the rules in 2014.</a> British authorities believe the rules simply encourage banks to pay higher base salaries to bankers, which cannot be "clawed back" by authorities if any subsequent bad behaviour is uncovered.</p>
<p>Carney was speaking at an event to mark the two-year anniversary of the FICC Markets Standards Board and was asked whether the City of London could become "Singapore-on-sea" after Brexit.</p>
<p>Many pro-Leave politicians have called for a bonfire of regulation after Britain leaves the EU in the hope that it will make Britain more competitive on a global scale.</p><p><a href="http://www.businessinsider.com/mark-carney-britain-could-scrap-bankers-bonus-caps-post-brexit-2017-11#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/what-city-amazon-choose-hq2-headquarters-philly-austin-2018-2">A Wharton professor predicts what city Amazon will choose for their new headquarters</a></p> http://www.businessinsider.com/pound-fall-after-the-bank-of-england-hiked-interest-rates-2017-11The pound dropped against the dollar and euro after the Bank of England hiked interest rateshttp://www.businessinsider.com/pound-fall-after-the-bank-of-england-hiked-interest-rates-2017-11
Thu, 02 Nov 2017 12:14:00 -0400Thomas Colson
<p>LONDON &mdash; The pound dropped against the dollar and euro after the Bank of England voted to raise interest rates from 0.25% to 0.5%.</p>
<p>Here is the chart as of 4.06 p.m. BST (12.06 p.m. ET):</p>
<p><img src="http://static1.businessinsider.com/image/59fb44bd7c6c144da53e7276-1200/screen shot 2017-11-02 at 160646.png" alt="Screen Shot 2017 11 02 at 16.06.46" data-mce-source="Investing.com" /></p>
<p>The pound was also on course for its worst day against the euro for over a year, according to financial analysts FactSet. It was down 1.76% at 16.06 p.m. BST (12.06 p.m. ET):</p>
<p><img src="http://static4.businessinsider.com/image/59fb44bd7c6c144da53e7277-1200/screen shot 2017-11-02 at 160632.png" alt="Screen Shot 2017 11 02 at 16.06.32" data-mce-source="Investing.com" /></p>
<p>Speaking of the MPC's decision, Andrew Sentance, senior economic adviser at PwC, said: "The Monetary Policy Committee (MPC) is right to raise interest rates, even though economic growth has been relatively disappointing so far this year.</p>
<p>"Other economic data - in particular high inflation driven by the weakness of the pound and the low level of unemployment - are much more supportive of a rise in interest rates.</p>
<p>"In addition, the MPC faces a long-term challenge of raising interest rates back to some sort of normal level after an exceptional and unprecedented decade of low rates since the financial crisis.</p>
<p>"This month's MPC decision is an important signal to the public that the era of very low interest rates is coming to an end. Further interest rate increases should be slow and gradual, but this is the first step along that road."</p><p><a href="http://www.businessinsider.com/pound-fall-after-the-bank-of-england-hiked-interest-rates-2017-11#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/wharton-david-reibstein-trump-bad-for-america-brand-davos-2018-2">Forget 'Make America Great Again' — Wharton professor says Trump has been terrible for America's brand</a></p> http://www.businessinsider.com/mark-carney-knows-a-recession-is-coming-2017-11Mark Carney knows a recession is coming — that's why he raised interest rateshttp://www.businessinsider.com/mark-carney-knows-a-recession-is-coming-2017-11
Thu, 02 Nov 2017 08:30:00 -0400Jim Edwards
<p><img src="http://static5.businessinsider.com/image/59f9e1349361af3362124fca-1500/mark carney.jpg" alt="mark carney" data-mce-source="(Photo by Kirsty Wigglesworth - WPA Pool/Getty Images)" data-mce-caption="LONDON, ENGLAND - NOVEMBER 3: Governor of the Bank of England Mark Carney speaks during the quarterly Inflation Report press conference at The Bank of England on November 3, 2016 in London, England." /></p><p></p>
<ul>
<li><strong>The Bank of England raised interest rates to 0.5%.</strong></li>
<li><strong>But the British economy isn't actually that strong and, under different circumstances, the central bank might have preferred to leave the rate where it is.</strong></li>
<li><strong>Governor Mark Carney knows that the UK is flirting with recession. There are too many negative variables that could trip up the economy in the future.</strong></li>
<li><strong>He needs more weapons to fight the bad news when it comes &mdash; that's one reason he was forced to raise interest rates now, so they can be cut again in the future. </strong></li>
</ul>
<hr />
<p><br />LONDON &mdash; Bank of England Governor Mark Carney announced a 0.25-point increase in the base rate of interest, to 0.5%, on Thursday.</p>
<p>Data like the chart below, showing increased orders by UK manufacturing managers, suggest that the economy is strong. Strong enough, the BoE hopes, to take action against inflation, which is currently a point higher than the BoE's preferred level at 3%.</p>
<p>But the British economy is actually fairly fragile right now. If circumstances were different the BoE might prefer to leave rates alone.</p>
<p><img style="float:right;" src="http://static5.businessinsider.com/image/59f9e1349361af3362124fcb-1612/screen shot 2017-11-01 at 132328.png" alt="Manufacturing pmi" data-mce-source="Markit/CIPS" />Carney's problem is that he knows a recession is very possible. A downturn could be triggered by a range of factors: The uncertainty of Brexit, exhausted consumers, or the vast amount of debt that has built up in the UK economy.</p>
<p>When it hits, the BoE needs weapons. In a recession, central banks like to make a large number of interest rates cuts over a period of time in order to signal clearly and repeatedly to the markets that money is going to get cheaper in the future and the bank is taking action.</p>
<p>With interest at its previous level &mdash; 0.25% &mdash; the BoE only had one weapon: a cut to zero.</p>
<h2>Carney needs to get the interest rate back up before the recession hits, to rearm himself</h2>
<p><a href="http://www.businessinsider.com/mark-carney-bank-of-england-negative-interest-rates-2016-8">Carney has all-but ruled out negative interest rates</a>. The difference between 0.25% and zero is negligible, certainly not big enough to delay or ameliorate a recession.</p>
<p>In short, when the rate was at 0.25%, Carney did not have his best weapon available. He needs to get the interest rate back up before the recession hits to rearm himself. That's why the MPC statement today says that the bank wants to hike the rate twice more, to 1%:</p>
<p style="padding-left: 30px;">"The MPC's most recent assessment of the outlook for inflation and activity, contained in the November Inflation Report, was conditioned on a market path that implied two additional 25 basis point increases in Bank Rate over the three-year forecast period."</p>
<p>A 1% rate gives Carney four potential cuts of 0.25% each in the event of a downturn.</p>
<h2>Plenty of people think the economy is still too fragile to cope</h2>
<p>A rate hike is a big risk. There are plenty of people who think the economy is still too fragile to cope. Consumers, in particular, are not in a strong state. That's important because consumer spending is roughly 66% of UK GDP.</p>
<p>In the last few months, the bottom dropped out of new car sales, for example:<img src="http://static3.businessinsider.com/image/59f9e1349361af3362124fcc-1000/new car registrations uk sept 2017.jpeg" alt="new car registrations uk sept 2017" data-mce-source="Pantheon Macroeconomics" /></p>
<p>The risk is that increasing the price of money will derail the UK's economic recovery (thus causing the recession Carney is hoping to avoid).</p>
<p>Former BoE Monetary Policy Committee member <a href="https://twitter.com/D_Blanchflower/status/925699375606661122">David "Danny" Blanchflower recently tweeted</a>: "Please explain why makes sense to slow an economy which has anemic growth falling retail sales negative real wage growth falling inflation?"</p>
<p>If you look at GDP over the last couple of years it's obvious that the rate of growth is in decline &mdash; not usually a scenario that calls for a hike.<img src="http://static1.businessinsider.com/image/59f9e1359361af3362124fcd-1770/uk gdp 2017.png" alt="UK GDP 2017" data-mce-source="Pantheon Macroeconomics" /></p>
<h2>You don't walk into a storm naked</h2>
<p>Bloomberg's Gadfly column makes a good, detailed case that <a href="https://www.bloomberg.com/gadfly/articles/2017-11-01/this-time-it-s-personal-as-boe-mulls-rate-rise">the UK economy is weaker than the BoE would like it to be</a>.</p>
<p>But Carney was under pressure to raise the rate precisely in order to give himself room to cut again when the worst happens. <a href="http://uk.businessinsider.com/europe-were-going-into-this-one-naked-2016-3">You don't walk into a storm naked</a>. That's a big part of the reason why the BoE delivered a rate increase to 0.5% today, despite signs of weakness.</p><p><a href="http://www.businessinsider.com/mark-carney-knows-a-recession-is-coming-2017-11#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/amazon-shaking-up-healthcare-industry-ripe-for-disruption-2018-2">Amazon is shaking up a healthcare industry that's ripe for disruption</a></p> http://www.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11BANK OF ENGLAND HIKES RATES TO 0.5%http://www.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11
Thu, 02 Nov 2017 08:02:05 -0400Will Martin
<p><img src="http://static1.businessinsider.com/image/59fb0a5a9361af46977d68cc-1200/bigraphicslondonbank2.png" alt="Mark Carney Bank of England 2x1" data-mce-source="BI Graphics" /></p><p></p>
<ul>
<li><strong>Bank of England raises interest rates for the first time in more than a decade.</strong></li>
<li><strong>Rates increased from 0.25% to 0.5% &mdash; reversing rate cut made in the aftermath last year's Brexit vote.</strong></li>
<li><strong>Hike had been widely trailed by the bank and was expected by markets.</strong></li>
<li><strong>Governor Mark Carney will speak to the press at 12.30 p.m. GMT (8.30 a.m. ET).</strong></li>
</ul>
<p>LONDON &mdash; The Bank of England on Thursday raised interest rates for the first time in more than 10 years, as had been widely expected by market watchers around the world.</p>
<p>The majority of the central bank's ratesetting Monetary Policy Committee voted to raise the UK's base rate of interest from 0.25% to 0.5%. Rates had previously stood at 0.5% for seven years between 2009 and 2016, before being cut to 0.25% last August in the aftermath of the Brexit vote.</p>
<p>Seven members of the committee voted to raise rates, out of nine. John Cunliffe and Dave Ramsden voted to keep rates at 0.25%.</p>
<p>"With unemployment at a 42-year low, inflation above target and growth just above its new, lower speed limit, the time has come to take our foot off the accelerator," Bank of England Governor Mark Carney said.</p>
<p>"To ensure a sustainable return of inflation to the target we have raised interest rates from 0.25% to 0.5%. That means taking our foot a little off the accelerator, reducing slightly the amount of support we are providing to the economy," <a href="https://www.inflationreport.co.uk/">the Bank of England said in a statement on its website.</a></p>
<p>Andrew Sentance, senior economic adviser at PwC,&nbsp;said the central bank was "right to raise interest rates, even though economic growth has been relatively disappointing so far this year."</p>
<p>"Other economic data - in particular high Inflation driven by the weakness of the pound and the low level of unemployment - are much more supportive of a rise in interest rates," said Sentence. "In addition, the MPC faces a long-term challenge of raising interest rates back to some sort of normal level after an exceptional and unprecedented decade of low rates since the financial crisis."</p>
<p>With inflation rising to 3% in September and GDP growing at a steady but unspectacular rate of 0.4% in Q3, the bank &mdash; which had signalled&nbsp;strongly in recent months that it would look to increase rates in November &mdash; seemingly had little choice to increase rates back to their previous level.</p>
<p><span>Analysts and forecasters were pretty much unanimous that a hike was coming. Of the dozens of research notes from major banks, asset managers and research houses seen by Business Insider in the run up to the decision, not a single one saw anything other than a hike on Thursday.</span></p>
<p><span>Many, however, have questioned the expediency of raising rates in an environment where the UK's economic relationship with the European Union remains unclear, and growth is well below the level that previously would have seen rate hikes &mdash; generally around 0.6%-0.7% per quarter.</span></p>
<p><span>The bank had to balance those concerns with the fact that inflation is 50% above its target level, and could rise further as the pound's drop since the Brexit vote filters into import prices.</span></p>
<p>Alongside its decision to raise rates, Britain's central bank also released its quarterly Inflation Report, providing an update of its forecasts for overall economic growth and inflation.</p><p><a href="http://www.businessinsider.com/bank-of-england-interest-rate-rise-brexit-mark-carney-2017-11#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/jim-chanos-interview-2018-2">Jim Chanos on the return of choppy markets, Tesla, and the 'rent-seeking behavior' that's hurting our economy</a></p> http://www.businessinsider.com/bank-of-england-interest-rate-brexit-analyst-forecasts-2017-10Analysts are unanimous: The Bank of England will raise interest rates for the first time in 10 yearshttp://www.businessinsider.com/bank-of-england-interest-rate-brexit-analyst-forecasts-2017-10
Thu, 02 Nov 2017 03:12:00 -0400Will Martin
<p><img src="http://static3.businessinsider.com/image/5982fb3b27fa6b128a38e270-1200/bigraphicslondonbank2x1.png" alt="Bank of England MPC" data-mce-source="BI Graphics" /></p><p></p>
<ul>
<li><strong>Analysts are unanimous in their belief that the Bank of England will hike interest rates on Thursday.</strong></li>
<li><strong>Rates are set to increase from 0.25% to 0.5% in the bank's first hike since 2007.</strong></li>
<li><strong>Forecasters differ on whether or not the increase will be a good idea.</strong></li>
</ul>
<p>LONDON &mdash; On Thursday at noon, the Bank of England will be the most watched central bank on earth, as it announces the decisions from the November meeting of its crucial Monetary Policy Committee. If the markets are to be believed, there's a nearly 90% chance that the bank will raise its base interest rate.</p>
<p>Doing so would mark the first increase in rates since 2007, before the financial crisis forced the bank to aggressively cut rates&nbsp;in order to cope with the shock brought to the British economy. After the crisis ended, the bank remained on hold for more than seven years. Between 2009 and August 2016 the base rate stayed at 0.5%.</p>
<p>It then dropped to 0.25% after the bank's emergency cut in August, which intended to soothe the economy in the immediate aftermath of June's Brexit vote.</p>
<p>Now however, the year and a quarter of 0.25% rates looks to be coming to a close, as Bank of England Governor Mark Carney and his MPC assess the need for higher rates in the UK economy.</p>
<p><a href="http://uk.businessinsider.com/bank-of-england-interest-rate-chart-2017-6">At its simplest level, the policy dilemma facing Britain's central bank</a><span>&nbsp;</span><span>&nbsp;is that it must balance surging inflation brought on by the weakened pound since the referendum, with the slowdown in the economy, dwindling consumer spending and declining inward investment. If the central bank&nbsp;keeps interest rates low, the risk is that inflation will get worse. If it raises them, the risk is that it might&nbsp;further dampen&nbsp;the economy.</span></p>
<p><span>Until the last couple of months, the weakening macroeconomy since the Brexit vote has held sway in the minds of most BoE ratesetters, but with inflation hitting 3% in September, <a href="http://uk.businessinsider.com/uk-economy-q3-gdp-brexit-2017-10">and growth strengthening from 0.3% in Q2 to 0.4% in Q3,</a> it seems pretty much inevitable that Britain will see a return to a base interest rate of 0.5%.</span></p>
<p><span>Analysts are pretty much unanimous about that. Of the dozens of research notes from major banks, asset managers and research houses seen by Business Insider in recent weeks, not a single one sees anything other than a hike on Thursday.</span></p>
<p><span>What they do differ on, however, is whether or not a hike is a good idea. Some analysts believe that the bank simply can't ignore the fact that inflation is currently 50% above its 2% target and must hike now, while others believe that the macro environment simply isn't suited to increasing rates, with the UK's sclerotic productivity a major concern for many.</span></p>
<p><span>Business Insider decided to round up a handful of the most interesting analyses from major firms, including charts when appropriate, which you see below.</span></p><h3>Mike Bell, Global Market Strategist, JPMorgan Asset Management</h3>
<img src="http://static3.businessinsider.com/image/56e3ee3bdd0895ba168b46f6-400-300/mike-bell-global-market-strategist-jpmorgan-asset-management.jpg" alt="" />
<p><p><strong>Their view:&nbsp;</strong><span>Markets are ready for a hike, and the reaction is likely to be subdued.</span></p>
<p><strong>What they say:</strong> "Market reaction should be relatively muted if a rate rise is delivered. That said, if the Bank of England gets cold feet and delays raising rates, sterling and gilt yields are likely to fall.&nbsp;</p>
<p>"If the Bank does raise rates, as expected, it is doing so against a weak growth backdrop, signs of weakness in the London housing market and a still hugely uncertain political outlook. Inflation is high predominantly because of the fall in sterling caused by the Brexit referendum result, not&nbsp;because of a strong domestic economy. &nbsp;</p>
<p>"The market only expects one additional rate rise next year, on top of the one this week, and is unlikely to price a more aggressive rate hiking cycle until there is more evidence that low unemployment is starting to feed through into an acceleration in wage growth, which may or may not materialise.</p>
<p>"The ongoing Brexit negotiations put the Bank of England in a challenging position: they have to try and set monetary policy based on the medium term outlook for the economy when the economic outlook has rarely been so uncertain and opaque."</p></p>
<br/><br/><h3>Peter Thorne, Senior Financial Analyst, Charles Stanley</h3>
<img src="http://static3.businessinsider.com/image/57a028d6dd0895d1788b472e-400-300/peter-thorne-senior-financial-analyst-charles-stanley.jpg" alt="" />
<p><p><span><strong>Their view:&nbsp;</strong>A hike will be a "double-edged" sword for the UK's banks.</span></p>
<p><span><strong>What they say:</strong> "Rock-bottom interest rates have been terrible for UK banks&rsquo; profitability, but any interest rate rise &ndash; which increases the amount they earn on interest free balances &ndash; could actually be a double-edged sword. </span></p>
<p><span>"Higher interest rates will boost UK banks&rsquo; net interest income but the equity market is increasingly concerned about the slowdown in the UK economy and the negative effects it could have on loan growth and bad debt charges which a rate rise might worsen."</span></p></p>
<br/><br/><h3>Martin Beck, Lead UK Economist, Oxford Economics</h3>
<img src="http://static1.businessinsider.com/image/59f874ff7c6c141e1c49fc67-400-300/martin-beck-lead-uk-economist-oxford-economics.jpg" alt="" />
<p><p><strong>Their view:</strong> A hike, but a finely balanced decision.</p>
<p><strong>What they say:</strong> "September&rsquo;s meeting saw a majority on the MPC conclude that a rate rise 'was likely to be appropriate over the coming months.' But with the macro data soft and public caution from some members, November&rsquo;s decision looks finely-balanced, if erring towards a hike."</p>
<p>"If it goes for a hike on 2 November, the MPC can point to an absence of downside surprises in support of such a move. But the case still looks weak. GDP growth of 0.4% in Q3 was above the Bank&rsquo;s expectation, although growth in 2017 has undershot the average pace since the current expansion began."</p>
<p>"As to how November&rsquo;s vote might go, two of the Bank&rsquo;s Deputy Governors, Sir Dave Ramsden and Sir Jon Cunliffe, have been clear that that they are not part of the hawkish majority. A third MPC member, Silvana Tenreyro, indicated that she is in the latter camp, but not that a hike was needed imminently. So any vote for a rise won&rsquo;t be unanimous."</p></p>
<br/><br/><a href="http://www.businessinsider.com/bank-of-england-interest-rate-brexit-analyst-forecasts-2017-10#/#samuel-tombs-chief-uk-economist-pantheon-macroeconomics-4">See the rest of the story at Business Insider</a> http://www.businessinsider.com/uk-economy-not-ready-for-rate-hikes-ex-boe-official-says-2017-10BLANCHFLOWER: The looming Bank of England rate hikes rekindles 'feeling of August 2008'http://www.businessinsider.com/uk-economy-not-ready-for-rate-hikes-ex-boe-official-says-2017-10
Sat, 28 Oct 2017 03:41:37 -0400Pedro Nicolaci da Costa
<p><strong><img src="http://static5.businessinsider.com/image/59f37311bcf93d46008b5203-1941/rts6hcj.jpg" alt="Mario Draghi Mark Carney" data-mce-source="Reuters/Suzanne Plunkett" data-mce-caption="European Central Bank (ECB) president Mario Draghi (L) and Bank of England governor Mark Carney arrive at the Bank of England's Open Forum 2015 conference on financial regulation, in London." /></strong></p>
<ul>
<li><strong>United Kingdom economic growth beat expectations in the third quarter, and inflation has picked up.</strong></li>
<li><strong>The Bank of England is hinting at possible interest rate hikes in coming months.</strong></li>
<li><strong>Ex-BOE member David Blanchflower tells us the economy is not ready for higher borrowing costs.</strong></li>
</ul>
<p>Stronger economic growth and higher inflation in the United Kingdom have <a href="http://www.businessinsider.com/markets-think-a-bank-of-england-rate-hike-is-coming-2017-9">raised market expectations</a> that the Bank of England could begin raising interest rates.</p>
<p>A rates rise would be aimed at recharging an anaemic economy scarred by the financial crisis and would be after a prolonged period of low borrowing costs.</p>
<p><a href="http://uk.businessinsider.com/ubs-predicts-brexit-recession-2017-10">Despite the difficulties surrounding Brexit</a>, the figures have prompted Bank of England Governor Mark Carney to declare that <a href="https://www.cnbc.com/2017/10/13/bank-of-englands-carney-says-it-may-be-appropriate-to-raise-interest-rates-in-coming-months.html">rate increases may be appropriate in coming months.</a></p>
<p>However, David Blanchflower, a former member of the central bank, now at Dartmouth College, fears the recent data are offering false positives for an economy that continues to struggle with weak productivity and stagnant wages.</p>
<p>"Inflation is set to drop after one-off effects of the pound&rsquo;s decline," associated with the initial reaction to last year's Brexit vote, Blanchflower told Business Insider.</p>
<p>The Bank of England&rsquo;s Monetary Policy Committee may be "set to make a huge error" if it does follow through on tightening monetary policy, he said.<br /><span></span></p>
<p>"This has the feeling of August 2008," Blanchflower said, referencing the time when the central bank was tightening monetary policy even as the UK and global economies slipped into the worst recession in generations. "There&rsquo;s zero in the data to justify a raise."</p>
<p>Gross domestic product <a href="http://www.businessinsider.com/uk-economy-q3-gdp-brexit-2017-10?r=UK&amp;IR=T">grew by 0.4% in the third quarter</a>, above forecasts for a 0.3% rise, while annual growth was 1.5%.<a href="https://www.businessinsider.com.au/pound-dollar-price-inflation-september-2017-9">Core consumer price inflation</a> climbed 2.7% from a year earlier, the highest since December 2011. Annual inflation also picked up to 2.9% in August, accelerating from 2.6% in July.</p>
<p>Blanchflower said the third-quarter GDP reading, despite beating market expectations, masked a persistent weakness that could intensify with Brexit.</p>
<p>"We are looking at growth of under 1.5% every year from 2017 through 2019," Blanchflower estimates &ldquo;Even then the risks are to the downside due to uncertainty over Brexit."</p>
<p>In addition, "falling real wages and falling retail sales suggest this is no time for a rate rise," he said.</p>
<p>One comforting note: Carney has often hinted at interest rate hikes and not followed through &mdash; <a href="https://www.nytimes.com/2014/06/14/business/economy/pound-rises-against-dollar-after-rate-increase-warning.html">starting around 2014</a>.</p>
<p>Maybe it&rsquo;s better to watch what he does rather than listen to what he says.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/sadiq-khan-double-london-housebuilding-to-meet-needs-of-londoners-2017-10?r=UK&IR=T" >New figures show the huge and growing scale of London's housebuilding crisis</a></strong></p>
<p><strong>DON'T MISS:&nbsp;<a href="http://uk.businessinsider.com/ubs-predicts-brexit-recession-2017-10" >Credit Suisse: There's a 1 in 3 chance of a Brexit-induced recession in the next 6 months</a></strong></p>
<p><strong>NEXT UP:&nbsp;<a href="http://uk.businessinsider.com/european-central-bank-october-monetary-policy-decisions-2017-10" >The ECB announced 'a sea change but a very gentle one'</a></strong></p>
<p><a href="http://www.businessinsider.com/uk-economy-not-ready-for-rate-hikes-ex-boe-official-says-2017-10#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/microsoft-president-brad-smith-davos-interview-trump-us-cant-get-too-isolationist-2018-1">Microsoft President Brad Smith says the US shouldn't get 'too isolationist'</a></p> http://www.businessinsider.com/bank-of-england-rate-hike-november-brexit-no-deal-ing-2017-10ING: Prospect of a 'no deal' Brexit will halt the Bank of England's rate risehttp://www.businessinsider.com/bank-of-england-rate-hike-november-brexit-no-deal-ing-2017-10
Thu, 19 Oct 2017 04:15:44 -0400Will Martin
<p><img src="http://static2.businessinsider.com/image/58f84e8edd08955f788b4a3a-1352/undefined" alt="Mark Carney and Philip Hammond" data-mce-source="Reuters/Neil Hall" /></p><p></p>
<ul>
<li><strong>Dutch bank ING sees Brexit uncertainties preventing a Bank of England rate hike.</strong></li>
<li><strong>Lack of clarity over what kind of deal, if any, Britain and the EU will strike will prevent rates from rising.</strong></li>
<li><strong>Markets expect the central bank to increase rates in November.</strong></li>
</ul>
<hr />
<p>LONDON &mdash; The&nbsp;growing chance that&nbsp;the&nbsp;UK&nbsp;crashes out of the European Union without a trade deal&nbsp;may stop the Bank of England from hiking interest rates in the near future, according to research from Dutch bank ING.</p>
<p>Market expectations are that the bank will almost certainly raise its base interest from 0.25% to 0.5% when the key Monetary Policy Committee meets at the beginning of November, thanks largely to surging inflation in the UK since the vote to leave the EU last summer.</p>
<p><span>The policy dilemma facing Britain's central bank when it comes to rates, is that it must balance surging inflation with the slowdown in the economy, dwindling consumer spending and declining inward investment. </span></p>
<p><span><a href="http://uk.businessinsider.com/brexit-uk-inflation-in-september-2017">With inflation hitting 3% last month</a>, it seems more likely than ever before that the bank will see the see-saw tilting toward the inflation side of the argument, prompting a rate hike.</span></p>
<p><span>ING economist James Smith, however, said that the uncertainty over whether or not an agreement can be reached over a transitional arrangement to smooth Britain's path out of the bloc, will put the bank's policymakers off any rate hike in the coming months.</span></p>
<p><span>"Given the number of open questions, not just on the transition, but on various Brexit issues, the Bank is likely to proceed cautiously until the picture becomes clearer," <a href="https://think.ing.com/articles/what-would-a-brexit-transition-actually-mean-for-the-uk-economy/?utm_campaign=October-18_what-would-a-brexit-transition-actually-mean-for-the-uk-economy&amp;utm_medium=email&amp;utm_source=emailing_article">Smith wrote in a blog on ING's "Think" economic research portal.</a></span></p>
<p><span>"At this stage, we feel that it is more likely than not that the Bank decides to stay hold through next year."</span></p>
<p><span>Throughout 2017 the Bank of England has made clear in its communications that it is basing its economic scenarios on a situation whereby Brexit negotiations proceed smoothly.</span></p>
<p><span>The reality so far has been a little different. Last week&nbsp;<a href="http://uk.businessinsider.com/brexit-talks-to-be-delayed-after-hitting-a-deadlock-over-britains-divorce-bill-2017-10">the EU's chief Brexit negotiator Michel Barnier said that talks between Britain and the bloc had reached a "deadlock."</a></span></p>
<p><span>Both parties are struggling to agree on a financial settlement tied to Britain's exit from the bloc, with the EU demanding a far greater sum than Britain is willing to pay at this point. That has led to something of an impasse in negotiations, with both sides saying that the ball is in the other's court.</span></p>
<p><span>Prime Minister Theresa May has also repeatedly stressed her belief that "no deal is better than a bad deal" &mdash; leaving the door wide open for Britain to drop out of the EU without any formal arrangement in place. This is a scenario that is unlikely to be considered "smooth" by the BoE.</span></p>
<p><span>This week the Bank of England's two newest policymakers &mdash; Silvana Tenreyro and Sir Dave Ramsden &mdash; made clear in separate appearances before the House of Commons Treasury Select Committee that they do not yet believe that the time has come to increase interest rates.</span></p><p><a href="http://www.businessinsider.com/bank-of-england-rate-hike-november-brexit-no-deal-ing-2017-10#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/vmware-ceo-pat-gelsinger-tech-superpowers-ai-mobile-cloud-iot-2018-1">VMware CEO reveals which tech will have the most impact on the world, and why Elon Musk is wrong on AI</a></p> http://www.businessinsider.com/mark-carney-bank-of-england-brexit-pain-2017-9CARNEY: The Bank of England is not 'omnipotent' and can't stop the pain of Brexithttp://www.businessinsider.com/mark-carney-bank-of-england-brexit-pain-2017-9
Thu, 28 Sep 2017 05:16:00 -0400Will Martin
<p><img style="float:right;" src="http://static1.businessinsider.com/image/59ca5a39ba785e696d2a9ed5-1029/mark%20carney.jpg" alt="mark carney" data-mce-source="Photo by Frank Augstein - WPA Pool/Getty Images"></p><p>LONDON — The Bank of England has limited power to prevent the painful economic adjustments that will come as a result of Brexit, <a href="http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech999.pdf">Governor Mark Carney said on Thursday morning</a>.</p>
<p>Speaking at the bank's "Independence: 20 Years On" conference to mark the beginning of its independence in 1997, Carney said senior policymakers do not have "omnipotence" and cannot completely offset any economic hardship caused by Brexit.</p>
<p>"While carefully circumscribed independence is highly effective in delivering price and financial stability, [the BoE] cannot deliver lasting prosperity and it cannot solve broader societal challenges," he said at the City of London's Fishmongers' Hall.</p>
<p>"This bears emphasising, because in recent years a host of issues has been laid at the door of the Bank of England from housing affordability to poor productivity.</p>
<p>"Calls for the Bank to solve these challenges ignore the Bank’s carefully defined objectives. And they confuse independence with omnipotence."</p>
<p>"The biggest determinants of the UK’s medium-term prosperity will be the country’s new relationship with the EU and the reforms it catalyses," he said.</p>
<p>"Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU."</p>
<p>Carney also used the speech to emphasise the continued role of "experts" in shaping economic, financial, and political challenges in the UK.</p>
<p>"So-called experts," have come under fire from certain Brexiteers in the year or so since Britain voted to leave the European Union, <a href="http://uk.businessinsider.com/mark-carney-quit-resign-2016-10">with Carney drawing particular ire from the likes of Tory MPs Jacob Rees-Mogg and Michael Gove</a>.</p>
<p>"The need for the bank to be open and accountable is greater than ever, not only because of the growing distrust of institutions and the 'experts' who reside within them, but also because better public understanding makes our policies more effective," Carney said in a thinly-veiled rebuttal to such comments.</p>
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</div><p><a href="http://www.businessinsider.com/mark-carney-bank-of-england-brexit-pain-2017-9#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/blockchain-explainer-and-potential-2018-1">Here’s a great explanation of what the blockchain is from the person tasked with explaining it to the world</a></p>